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SEVENTH ANNUAL REPORT 



OF 



THE ONTARIO ENERGY BOARD 



YEAR ENDING DECEMBER 31, 1966. 



INTRODUCTION 

The Ontario Energy Board functions under the 
authority of The Ontario Energy Board Act, 1964, certain 
sections of The Municipal Franchises Act pertaining to 
approval of franchise agreements and granting of certificates 
of public convenience and necessity for the distribution of 
natural gas and one section of 3?ne Assessment Act. 

One of the main responsibilities of the Board is 
to fix and approve, after public hearing, the rates and 
charges for the sale, transmission, distribution and storage 
of gas in the Province. Other functions include the granting 
of leave to construct transmission pipe lines, authority to 
expropriate pipe line easements, authority to store gas in 
designated areas, the joining of interests and the allocation 
of market demand for the purpose of oil or gas production. 
In addition, the Board examines and reports on any matters 
relating to energy which may be referred to it by the Lieutenant 
Governor in Council or the Minister of Energy & Resources 
Management . 

This report is submitted in accordance with Section 
9 of The Ontario Energy Board Act, 196i+ and it outlines the 
activities of the Board for the calendar year ending December 
31, 1966. 



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HEARING STATISTIC S 

During the year, the Board received 162 applications, 
and of these 120 were heard, 7 were withdrawn and 35 will be 
heard in 1967. Seventeen applications which had been received 
in 1965 were also heard during 1966. The following is a break- 
down of the 137 hearings held during the year: 

T he Municipal Franchises Act 

Terms and conditions of gas franchise agreements 

(Section 9) Id 

Certificates of Public Convenience and Necessity 

(Section 8) 11 

The Ontario Energy Board Act, 1961+ 

Rates and other charges (Section 19) 20 

Leave to construct transmission pipe lines (Section 37) 13 

Expropriations for pipe line easements (Section 2+0 ) 55 

Exemptions from leave to construct orders (Section 37) 8 

Pooling of interests within a spacing unit (Section 24) 1 

Designation of gas storage areas (Section 35) 1 

Authorization to inject, store and remove gas in 
designated storage areas (Section 21) 1 

Drilling of wells in designated gas storage area 

(Section 23 referred by Minister) 6 

References by the Lieutenant Governor in Council 

(Matters respecting energy) 2 

Amending Orders 1 



Total 137 



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GENERAL ADMINISTRATIO N 

In accordance with the Board's usual practice, 
hearings were held at locations most convenient for the 
applicant and interested parties. Twenty-one hearings, some 
involving a number of applications, were held outside Toronto. 

The Board held 16 Board meetings, as well as many 
pre-hearing meetings and interviews during the course of the 
year. In addition, several trips were made to the site of 
petroleum and natural gas industry projects proposed or under 
construction, and Board members attended the Gas and Petroleum 
Association convention in Windsor and the annual Conference 
of Canadian Public Utilities Commissioners in Montreal. 

During past years the Board has obtained from oil 
and gas transmission companies in the Province, information 
pertaining to the length and diameter of all transmission 
lines in operation. This data was forwarded to the respective 
assessors of approximately 800 municipalities and was used for 
assessment purposes. The Assessment Act was amended in 1966 
and the Board will not, in the future, be responsible for this 
administrative function. However, in the event of a dispute 
between a transmission company and a municipality with respect 
to the designation of transmission lines for assessment pur- 
poses, the Board may be required to hold a public hearing and 
make a final determination. 



Digitized by the Internet Archive 
in 2013 



http://archive.org/details/annualreportonta1966onta 



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LEGISLATION 

No amendments were made to The Ontario Energy Board 
Act, 196i+ at the 1966 Session of the Legislature. As mentioned 
elsewhere in this report, an amendment to The Assessment Act 
and the passing of a regulation prescribing a uniform system 
of accounts for gas utilities will alter and extend the Board 9 s 
responsibilities in 1967. 

RATES 

During the year the Board heard twenty applications 
for the fixing and approving of rates and other charges for 
the sale of gas. The only major rate hearing, that of Lakeland 
Natural Gas Limited, will continue into 1967 and its progress 
is outlined below. 

Most of the applications heard were for the initiation 
or continuation of interim rates pending a final determination 
by the Board. The remaining applications were for rates cover- 
ing the sale of large volumes of interruptible or firm gas for 
industrial use. 

During the latter part of the year the Board held 
several meetings with officials of The Consumers' Gas Company 
with respect to the commencement of public rate hearings for 
its subsidiaries, Provincial Gas Company Limited and Grimsby 
Natural Gas Company Limited. Late in December Consumers* 
notified the Board of its intention to transfer the assets 



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of these subsidiary companies to the parent company. The 
effect of this action was to terminate, effective December 31, 
1966, the operations of Provincial and Grimsby which would be 
taken over, without interruption of service, by The Consumers* 
Gas Company. 

Rates charged by The Consumers' Gas Company in all 
areas served, including the Pro vine inl and Grimsby areas, will 
be the subject of public hearings commencing in 1967. 

LAKELAND NATURAL GAS LIMITED RATE HEARING 

The original rate application of Lakeland Natural Gas 
Limited was dismissed by Order, effective December 31, 1965 a ^ 
the request of the Applicant and a new application was filed. 

During the year, the Board proceeded with 85 days 
of hearings related to this application. The record of evidence 
to December 31, 1966 covers over 1200 pages of transcript and 
includes the testimony of six expert witnesses and fifty-two 
exhibits. The hearing was adjourned after the presentation 
of evidence on rate base and earned return in order to provide 
the Applicant and the Board with time to arrange for expert 
witnesses to present evidence as to a fair rate of return for 
Lakeland. Direct evidence on the fair rate of return was 
completed during November and cross-examination of the witnesses 
and final arguments by counsel will complete the hearing early 
in 1967. The Board's written Reasons for Decision and sub- 
sequent Order will be issued shortly thereafter. 



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UNIFORM SYSTEM OF ACCOUNTS 

A Uniform System of Accounts for gas utilities was 
established by a regulation passed in July, 1966, under The 
Ontario Energy Board Act, 1964. This regulation culminated 
an extensive period of study and consultation prior to and 
following the passage of the enabling legislation in 1965- 
It was the objective of the Board at all times to avoid un- 
necessary disruption of the accounting methods in use by the 
utilities, while bringing about the essential changes. During 
the first six months of 1966 many meetings were hdld with 
industry representatives and with the Board 's accounting con- 
sultants, McDonald, Currie and Company, to review the many 
important points at issue. 

The implementation of this system of accounts will 
bring about a substantial degree of uniformity of accounting 
among gas utilities in Ontario and elsewhere in Canada where 
similar systems are already in effect. It is expected to make 
more readily available to the Board the accounting information 
it requires for regulation, especially in the matter of gas 
rates . 

CONSTRUCTION OF PIPE LINES 

The major pipe line project approved and constructed 
during 1966 was Twin City Gas Company v s 58-mile 10" natural 
gas pipe line from the Trans-Canada Pipe Lines Limited 30" 



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main line to the Township of Atikokan. The purpose of the 
pipe line is to provide gas for iron ore pelletizing operations 
in the Steep Rock Lake area and for distribution in the town- 
site at Atikokan. 

Other transmission lines constructed, after approval, 
included a 28-mile, 10" pipe line between Durham and Owen 
Sound for Union Gas Company of Canada; a 44-mile, 6" line 
between Bradford and Beaverton for The Consumers 9 Gas Company 
and a 9-mile, 10" and 12" Union Gas pipe line in Moore and 
Sombra Townships to serve a large industrial customer. 

Approval was given to Twin City Gas Company Limited 
to construct, in 1967, an 8i+-mile, 6" transmission line from 
Vermilion Bay to Bruce Lake to provide gas for iron ore 
pelletizing and a future townsite. It is expected that an 
additional application will be made by the Company prior to 
construction to increase the size of this pipe line to 8". 

Approval was also given for several short laterals, 
and for replacement and relocation projects necessary because of 
deterioration or to accommodate highway and other public works. 

EXPROPRIATION HEARINGS 

The Board, after granting leave to construct a pipe 
line or station may, following a public hearing, authorize 



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the owner of the pipe line to expropriate land for that 
purpose. During the year the Board held public hearings 
for fifty-five applications for this authority. Thirty-eight 
of these proceedings were for easements along the route of 
Union Gas Company ? s proposed 3k r ' pipe line to be constructed 
in 1967 between Woodstock and Hamilton. An additional eleven 
applications were for authority to expropriate land along the 
route of that company ? s Durham-Owen Sound pipe line. 

As in previous years, the Government appointed a 
special inspector to act as liaison between the landowners 
and the pipe line company during construction operations in 
highly cultivated areas. The inspector also ensures that 
terms and conditions of Board Orders are complied with by the 
company constructing the pipe line. 

It should ba noted that in pipe line expropriations, 
the Board is not empowered to deal with any compensation 
matters. These may be referred to a Board of Arbitration 
appointed by the Minister under The Ontario Energy Board Act. 
A Board of Negotiation appointed under the authority of The 
Expropriation Procedures Act provides further assistance to 
the landowner. This Board, at the request of either a 
landowner or pipe line company, will assist in negotiations 
between the two parties. If settlement cannot be reached in 
this manner, reference may be made to the Board of Arbitration 



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by either party. It is not compulsory that such matters be 
brought before the Negotiation Board before going to arbitra- 
tion but this procedure does make available an informal 
proceeding through which settlement may be reached. 

APPROVALS - CERTIFICATES 

The Board, following public hearings, granted 
certificates of public convenience and necessity for the 
distribution of natural gas in nine municipalities not pre- 
viously served. In addition, two applications filed in 1965 
were heard during the year and resulted in certificates being 
granted to Twin City Gas Company for distribution of gas in 
the Atikokan area and to Farmers* Gas Company for distribution 
in a portion of Colchester South Township. 

The Board approved the terms and conditions of 
eighteen gas franchise agreements between natural gas dis- 
tributors and municipalities during the year. 

GAS STORAGE AREAS 

Union Gas Company of Canada, Limited made an ap- 
plication to the Ontario Energy Board in February, 1966, in 
two parts. The first part was an application to enlarge the 
area of the Dawn #59-6*5 Storage Pool of the Company. The 
second part of the application was for authority to inject, 
store and remove gas from the proposed additional area. 



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Following a public hearing, the Board recommended 
to the Lieutenant Governor in Council that the additional area 
be designated and subsequently a regulation was passed giving 
effect to this recommendation. 

The Board reserved its decision with respect to 
authority to inject, store and withdraw gas from the additional 
area and this decision will be given in January, 1967. 

On reference by the Minister of Energy & Resources 
Management, the Board heard applications for permits to drill 
new wells in the Kimball-Colinville, Crowland and Corunna gas 
storage areas. In addition, Imperial Oil Limited made an 
application to drill a well in the Bickford designated storage 
area in which gas is still being produced preparatory to con- 
version to storage operations. Applications were made for a 
total of seven new wells in these areas and, following public 
hearings or meetings with the Applicants, the Board recommended 
that the permits should issue. 

GENERAL 

Throughout the year, the Board continued to study 
and keep under review matters related to the oil and gas 
industry where the interests of the Province of Ontario were 
involved. 

Of particular concern at this time is an adequate 



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supply of gas to meet, the requirements of Ontario customers 
in the winter of 1967-68 and thereafter. Trans-Canada Pipe 
Lines Limited, through its affiliate Great Lakes Gas Trans- 
mission Company, has applied for authority to construct a new 
major pipe line south of the Great Lakes to transmit the 
necessary volumes of gas from Emerson, Manitoba, to Sarnia 
with a branch line proposed to serve Sault Ste. Marie. While 
the Canadian Government has granted the necessary approvals 
for this project, the United States Federal Power Commission 
has yet to make a ruling. Representatives of the Board attended 
hearings on this matter before the National Energy Board and 
the Federal Power Commission. This project, as well as any 
possible alternative means of providing the gas supply needed, 
will be reviewed by the Board on a continuing basis. 

PERSONNEL 

Mr. L. R. MacTavish, Q.C., a part-time Board Member 
since the inception of the Ontario Fuel Board in 1954, resigned 
effective November 30, 1966. 

Effective on December 1, 1966, Mr. I. C. MacNabb, 
formerly Board Engineer, was appointed as a Member and Vice- 
Chairman. 

The Board now consists of Mr. A. R. Crozier as 
Chairman, Messrs. A. B. Jackson and I. C. MacNabb as Vice- 



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Chairmen and two part-time members, Professor E. A. Allcut 
and Mr. D. M. Treadgold, Q.C. 

A stenographer was added to the Board 9 s staff 
during the year, maintaining the staff complement at six 
persons . 



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